Month: September 2022

LGE Adding Another to the Loop 303 Corridor

Posted on by Tom Radz

Earlier this month, LGE Design Build, alongside developer Echo Real Estate Capital, broke ground on Echo Park 303, a two-building, modern industrial facility in Glendale, Ariz. This project will mark the latest addition to the flourishing Loop 303 corridor, in the West Valley of Phoenix, which is becoming one of the premiere industrial submarkets in the nation.

Situated on nearly 40 acres of land, just north of Luke Air Force Base, Echo Park 303 will feature a total of 676,000 square feet of best-in-class industrial product. Future tenants of the facility will enjoy easy access to major transportation thoroughfares as it sits near the intersection of Northern Parkway and Reems Rd., approximately three miles from Loop 303 and less than ten minutes from Interstate 10.  It will be in the immediate proximity of distribution centers for major brands like Red Bull and Mark Anthony Brewing (White Claw and Mike’s Hard Lemonade), as well as Cold Summit, a large-scale cold storage facility, which sits directly across the street.

Echo Park 303 Site Plan

“It’s an exciting time to be building in Phoenix, especially in the West Valley,” said Blake Wells, director of preconstruction at LGE Design Build. “We are one of the leading markets in the nation when it comes to industrial projects like this one, and the incredible demand for the 303 corridor is a major reason for that.”

Upon completion, which is expected in Q3 of 2023, Echo Park 303 will be comprised of a 456,000-square-foot building and a smaller 220,000-square-foot one, with clear heights of 40 feet and 32 feet, respectively. Ample parking will be available as well, with 743 parking spaces and gated yards for nearly 150 trailer spaces, making it an ideal facility for companies looking to distribute their products across the Southwest.

In addition to the best-in-class industrial amenities, Echo Park 303 will boast more than 28,000 square feet of Class A office space. Highlighted by the signature modern architecture of LGE Design Group, these buildings will feature two stories of storefront window systems to allow for natural lighting in the lobbies and offices situated on the corners of the buildings. The windows will be complemented by the use of clean lines and open space of the modern exterior structure that will define the entrances, enhancing the overall aesthetics of the surrounding area.

Echo Park 303 Rendering

“We are very excited about this project and to be working with Echo Real Estate Capital,” said Wells. “They have been amazing partners throughout the entire preconstruction process and we hope this project sets the foundation for many future collaborations between our two companies.”

Volatility of Construction Materials in Q3

Posted on by Tom Radz

The previous two years have been a wild ride when it comes to the prices of construction materials. While some materials have fluctuated drastically, many others have steadily risen. With bottlenecks in the supply chain and rising gas prices, along with other untimely factors, the cost of securing necessary construction materials placed an added burden on every firm across the nation. These costs had to be, unfortunately, passed on to the consumer.

However, as pressure on the supply chain continues to dissipate, certain commodity prices have begun to improve. While the ongoing war in the Ukraine continues to pose challenges globally, gas prices have recently begun to trend downward, and that cost appears to be already reflected in the price of some domestic materials.

VOLATILE LUMBER PRICES

Lumber has been one of the most volatile of materials over the past two years.  Since September of 2020, this commodity has drastically fluctuated, rising 40 percent over the second half of 2021 and now lowering 16 percent over the first half of 2022. 

Lumber prices chart

GLASS STOREFRONT SYSTEMS SURGING

While flat glass has somewhat stabilized nationwide, we have seen a staggering increase of 40 percent in the price of glass for storefront systems, here in the Southwest, over just the past quarter.

Flat glass prices chart

STEEL MILL PRODUCTS

Prices on steel mill products have dropped more than 14 percent since spiking in May as demand continues to wane. Experts point to the overproduction of steel in Q4 of 2021 as the reason for this drop in price.

Steel mill products prices chart

FINAL DEMAND FOR GOODS

In the month of July, the index for final demand for goods fell by 1.8 percent, which is the largest drop since early 2020 when it fell 2.7 percent. Much of this decline can be attributed to a 16.7 percent drop in gasoline prices. 

Final demand for goods chart

What to Know About Semiconductor Construction in Phoenix

Posted on by Tom Radz

Phoenix natives know that driving north on Interstate 17 means two things – traffic and scenery. But well before the terrain turns to majestic mountains, there is another changing landscape, just as you’re leaving Phoenix, that has also been turning some heads.

From the highway, it is hard to miss the 38 cranes that are scattered throughout a 1,100-acre construction site where the Loop 303 meets the I-17. This site will be the future home of a $12 billion semiconductor plant operated by the Taiwanese company, TSMC. 

The sheer size of the operation is undoubtedly impressive, but the implications it has for other projects in the Phoenix Valley doesn’t necessarily have local general contractors singing its praises. The ripple effect of such a project has posed major challenges for construction firms who were already having a hard time sourcing materials because of the pre-existing supply chain issues. 

When you consider the fact that Intel is investing $20 billion in two similar facilities in the Phoenix Valley, it is safe to say that securing materials for other projects in Arizona will become even more difficult. Subcontractors are already being put on allocation for many of the materials needed for the semiconductor projects.

While it may be difficult to pin down exact numbers as to what degree these new facilities will delay other construction projects, an in-depth look at what we already know about the TSMC plant and recent legislation may help shed some light on what can be expected in the near future.

THE DEMAND FOR SEMICONDUCTOR PRODUCTION

Just as the onset of the pandemic created a shortage in the supply of many items, computer chips, like the ones that will be produced by TSMC here in Phoenix, also proved to be scarce. These chips are vital for not only computers, but cell phones and major household appliances as well, along with many other electronic devices.

Technicians building semiconductor chips

RECENTLY PASSED LEGISLATION

In early August, President Biden signed into law the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act). Of the $280 billion allocated toward the bill, $52 billion will be devoted specifically toward incentivizing chip production domestically. Just one week prior to Biden signing the CHIPS Act into law, U.S. Speaker of the House, Nancy Pelosi (D-California), made a trip to Taiwan to meet with the chairman of TSMC to discuss what the bill entails. The meeting is a strong indication that TSMC is considering building more factories at their site in Phoenix.

TIMELINE OF THE TSMC CONSTRUCTION

Construction on the TSMC plant began in 2021 and they are expected to start production of their chips in 2024. Completion of the fabrication structure (“fab”) is near completion, and as of June, about half of the glasswork had been installed. Under normal conditions, a plant like this can generally be built in a little more than a year’s time, but supply chain issues and the fact that this is a Taiwanese company building their facility overseas, it is expected to take longer.

SIZE OF THE PROJECT

Across the 1,100 acres of land in North Phoenix, the TSMC complex is expected to total 3.8 million square feet once completed.  If the company does decide to build additional “fabs” on the site, the total cost could be as high as $35 billion.

Semiconductor Chip

SIMILAR CONSTRUCTION PROJECTS

In addition to the TSMC and Intel facilities, other developments are in the works to strengthen the supply chain to the these plants. Most notably, Sunlit Chemical, a company that produces chemicals used in the manufacturing of semiconductors, broke ground on a $100-million facility earlier this year, near the TSMC plant in North Phoenix.

MANUFACTURING AND CONSTRUCTION JOBS

The TSMC plant is immediately expected to create 1,600 jobs and nearly 5,000 manufacturing jobs over the next three years. According to Intel, their semiconductor plants will create approximately 15,000 jobs, which doesn’t include the more than 3,000 construction positions needed to build their two facilities. Because Sunlit Chemical relies heavily on automation for the production of their chemicals, their impact in terms of labor will not be as significant, but their services are vital to TSMC and Intel’s operations. They will, of course, need to dip into the construction labor pool to complete the building of their 900,000-square-foot facility.

The Loosening Supply Chain in Q3

Posted on by Tom Radz

In late 2021 and into the early part of 2022, the supply chain outlook was dire. A combination of logistical bottlenecks, production setbacks, and labor shortages brought shipping to a near halt. Volatile global politics and domestic instability further complicated the situation. Over the course of the first half of the year, these issues have not been totally alleviated, but they have been diluted enough to show a stark improvement.

Recent figures show there is cause to be optimistic about the current conditions of the supply chain. The once “perfect storm” that was causing all the problems seems to be dissipating as shipping delays on water and land are becoming less frequent.

DECONGESTION AT U.S. PORTS

There has been an 80 percent reduction, since the beginning of the year, in the number of ships that are waiting in U.S. ports. Shipping containers are also no longer in short supply, and there is even a current surplus of approximately 6 million of them across the globe.

THE TRANSPORTATION SECTOR

The unemployment rate in the transportation sector was at 4.2 percent in the month of July, putting it more than a full percentage point below its pre-pandemic mark. In the same month, approximately 3,500 trucking jobs were added. Since the shutdown, the trucking industry only saw one month, this past March, where job numbers dropped, but only slightly. Despite that small setback, the sector has enjoyed nearly two years of straight growth.

ARIZONA ISSUES IN THE SUPPLY CHAIN

While nationally there appears to be some light at the end of the tunnel, additional factors have emerged in Arizona where the construction of three semiconductor plants have made it difficult for local subcontractors to source materials. Many of these subcontractors have been put on allocation for vital building materials, which is delaying some projects.

INFRASTRUCTURE BILL

The Infrastructure Investment and Jobs Act, passed last November, might also present a similar predicament once these projects begin. A provision within the act requires that all materials for roads and bridges must be sourced domestically, which could reintroduce some strain to the supply chain, nationally.

Click below to download and share our Q3 Supply Chain Infographic, along with our other research.

Midway: Elevating Industrial Design in Chandler

Posted on by Tom Radz

The growing industrial submarket in the Southeast Valley of Phoenix will be seeing a three-building complex added to it very soon. Midway Commerce Center, on which LGE Design Build recently broke ground, will add just over 300,000 square feet of best-in-class industrial product to Chandler, Ariz.

The buildings, which are being developed by LGE’s sister company Creation, will be suited for light-industrial tenants who are looking for state-of-the-art distribution facilities with easy access to major transportation thoroughfares. The facility will be conveniently located near the intersection of State Route 87 and Loop 202.

The interiors will feature a 32-foot clear height with 52-foot column spacing, along with nearly 70 dock doors between the three buildings. The size of each of these buildings will slightly vary in size.

“What’s most exciting about Midway is the design of the project,” said Chris McClurg, principal at Lee & Associates, the firm who is handling the leasing. “We have buildings ranging from 75 to 108,000 feet, up to 118,000 feet, with excellent loading, clear height, and power.”

The logistics amenities of Midway Commerce Center will only be complemented by the exterior designs, all of which were done by LGE Design Group. The entrances will boast a two-story storefront window system with a sleek, modern look that is accentuated by clean lines and a steel canopy that curves around the corners of the buildings.

Aerial view of Midway Commerce Center

“We went through a process with the City of Chandler where they really wanted to elevate the design standards for industrial design,” Mike Russo, lead design architect for LGE Design Group. “Some of the design moves that we did got integrated. I think there’s a lot of details in the design that are gonna show through once it’s built.”

The modern design of Midway Commerce Center will do more than just add to the aesthetic of the City of Chandler’s rapidly changing landscape. The already-existing skilled workforce in the community is also expected see the project as a welcome addition.

“This project fits in well with the vision for the city as well as the Chandler Air Park area,” said Ryan Kaup, economic development specialist for the City of Chandler. “I’m most looking forward to additional product come online as we have very low industrial vacancy rates in the community. We have a very educated community and having these buildings available really will help us as we continue to attract those advanced uses.”

Midway Commerce Center is expected to be completed in Q3 of 2023. Please direct all leasing inquiries to Lee & Associates.

Breaking Down Q3 Construction Labor

Posted on by Tom Radz

When it comes to employment in the construction sector, the numbers can be a little misleading if you are not exactly sure how to interpret them. There are so many different positions that need to be filled, across a number of skilled trades, so the overall figures may look positive when, in fact, there is still a long way to go. This is the case for the present situation in which the construction industry finds itself.

THE OVERVIEW OF CONSTRUCTION UNEMPLOYMENT

The construction unemployment rate is now well lower than the pre-pandemic levels and the sector is filling more positions daily. Skilled trades, however, continue to struggle to recruit the younger generation to fill the gap left by early retirees from the pandemic.

Construction unemployment rates

THE BREAKDOWN OF THE NUMBERS FOR NONRESIDENTIAL CONSTRUCTION

From April to July, the construction unemployment rate fell, this past quarter, from 4.6 percent to 3.5 percent, which is well below the pre-pandemic mark of 5.5 percent. There is even a larger decline when looking at the entire first half of 2022, which began with a 7.1 percent mark for unemployment. This was the highest the rate reached since April of 2021 when it was at 7.7 percent.

residential and nonresidential construction sites

RESIDENTIAL VS. NONRESIDENTIAL CONSTRUCTION HIRES

In July, total construction employment rose by 32,000 hires, however, the nonresidential construction sector has yet to surpass its pre-pandemic levels. Residential construction appears to be shouldering a large portion of the lift when it comes to new hires. As of June, nonresidential construction was still -2.9 percent below its pandemic level for employment, while residential was up 6 percent.

THE SKILLED TRADES SITUATION

The skilled trades, specifically, continue to struggle to fill positions that were vacated by older workers who opted for early retirement during the shutdown. The construction industry is still looking to add approximately 650,000 workers in 2022, according to the U.S. Department of Labor. This number is quite daunting when considering that less than 45,000 apprentices completed their programs in 2021.

construction skilled labor chart

To learn more about the current state of the construction industry, click here to download our Q3 2022 Construction Delivery Outlook.

Meet our New Director of Construction in Texas

Posted on by Tom Radz

As part of an on-going effort to grow our operations in the Dallas-Fort Worth area, LGE Design Build recently took one more integral step toward our goal of setting the bar in this flourishing market. At the end of last month, we brought on Caleb Parsons to be our Director of Construction at our LGE Texas headquarters in Dallas. Caleb has already drawn from his deep well of experience to hit the ground running in his new role. Last week, we were able to catch up with him and hear more about his background in the construction industry that dates back to his childhood.  

You come from a long line of builders in your family. How has that impacted you throughout your career?

From a young age, construction is all I knew. I find myself leaning on the experience and knowledge that my grandfather and father taught me. This first-hand understanding of construction skills has always been a valuable tool in seeing the full scope of the construction process and identifying potential issues before they occur.

Other than those in your family, who has had the biggest impact on you, professionally?

Abhishek Gupta. He was my Senior Project Manager on the SCVM Hospital Project and has stayed in touch and mentored me for the last 12 years. Gupta has taught me the value of first-hand communication and to always challenge the roadblock before trying to solve an issue.

What is your background geographically? And what is your connection to Texas?

I was born in a small logging town in Washington State. I have lived and worked in Maine, Arizona, California, Washington, and now Texas. Texas has been a goal of my wife and I for the last 8 years, and we are proud to have made it here and ready to establish our roots deep in the community.

You owned and operated your own business. Tell us a little more about that and what it taught you about leadership.

I would say that leadership was identified as a necessary skillset early in the process. As I was building the company from extremely small roots, it became clear to me that I could not accomplish my goals on my own. I would need the support of my staff, local suppliers, subcontractors, and the community.

Leadership, in my opinion, is never mastered; I consider myself a student and am always looking for feedback to improve.

What’s the biggest difference between your past roles in operations and your current role?

Involvement in the process at an earlier stage of design/concept. Sole responsibility for the success of the Construction Division.

What is the biggest challenge you see in the Dallas market?

Relationships – Dallas is an extremely tight-knit area and relationships drive a good portion of business here. 

How is LGE poised to make an impact in the largest industrial construction market in the nation?

LGE has a hand up from my vantage point, due to our knowledge and capability of design build. The value in true, cost-saving design build is something most companies do not understand. With our roots established, and a good base of subcontractors, we should be able to leverage those successful projects and build momentum in future endeavors.

What is most exciting to you about the Dallas market?

Opportunity. There continues to be a steady stream of global companies moving their operations to the state of Texas. With the central time zone, centralized shipping, and continual support from state and local leadership, the sky is the limit.

Which of your previous positions do you feel prepared you the best for the role you are taking on at LGE?

Operations Manager at FORMA Construction. In this role, I reported to an amazing leader in Jace Munson. Jace always encouraged me to take on responsibility and allowed me to operate with autonomy after building trust with him. This allowed me to create and implement a new process, improve our deliverables, and bring on talent that ultimately doubled our volume over 4 years.

Another role that prepared me was owning and operating ONYX Industries. This taught me many valuable lessons. Failure is the most valuable teacher, and I had many opportunities to learn from them.

Do you have any short or long-term goals for your position at LGE?

Short-term goals are to build relationships with our staff and design partners and to fully understand our current processes and procedures.

Long-term goals are to grow this division to $500 million-plus in the next three years.

I would like to make a lasting impression here at LGE and ultimately end my career here as a principal partner.

Is there a learning curve as the Director of Construction for a design-build firm vs. a traditional contractor?

Mindset. I have been part of design-build projects in the past, so this helps, but the internal team aspect of our unique deliverable is exciting, and I need to keep my perspective on this as I interact with project challenges.

What has been your biggest challenge, thus far, at LGE?

Starting slow. I’m fighting my urge to jump in neck-deep and start implementing a new process. This was a promise I made to myself, that I would take the time to fully understand how we operate, before making suggestions or strategizing with the team on how we can improve.

What project are you most looking forward to and why?

The LGE Texas Headquarters. It will be great to see our staff move into a newly renovated building that signifies that LGE is here to stay and ready to take on more volume.

One of your hobbies is working on cars. Tell us about your most current project.

Currently, I’m working on a 2019 Mustang GT. This is my first American project, as I have always built German cars (9 BMWs and 2 Audis).

I have a Whipple Stage 3 Supercharger, Twin-Disc Ceramic Clutch, Carbon Fiber Driveshaft, Outlaw Half Shafts, and a dual return fuel system, that should put 900 HP down. I struggle with time, as always, so I may be working on this for the next two years.

A future project is a 1971 MACH 1 with my children. Frame-off Resto Mod.

What advice would you give someone who is just starting out in the construction industry but has aspirations of becoming a director of construction?

Listen, work hard, do what you say you will do, and always be willing to help others.